Today, the government notified what it calls the circular 1 of 2012, its fifth six-monthly update on Consolidated FDI Policy, since it began doing so in March 2010.

In one of the major clarifications that will impact e-commerce in India, the policy has clarified that “existing restrictions on FDI in domestic trading would be applicable to e-commerce as well.” Which means a foreign company cannot take either the automatic or government route to invest directly in a retail e-commerce venture in India. However, like in offline retail, it allows FDI B2B e-commerce. In short, all the rules of FDI that apply to offline retail would apply to e-commerce as well.

This is the first time that the government has clarified its stance on e-commerce. Earlier this year, in a column that I wrote in Dataquest, titled, Stoped FDI in Retail? Here Comes E-commerce, I wrote about this anomaly. “Online retail is not defined as retail by today’s government definition,” I pointed out that time.

Most of the e-commerce ventures, though, will not be affected, as few, if at anyone at all, has FDI investment. In fact, Amazon, which has been eyeing Indian market for a long time was not taking the big step anticipating this policy stance. So, it entered with junglee.com, a sort of marketplace, in the likes of eBay but targets different kind of sellers, mostly the e-commerce service providers. This India-specific services serves as an aggregator platform.

However, the market was rife with speculation that Amazon wanted to buy out Flipkart. It was even speculated that the two parties were in negotiation but there was valuation mismatch.

With this clarification, though, for the time being, any plan of Amazon to enter Indian market directly selling to consumers, has to be shelved.

2 responses to “Sorry Amazon, You Are Not Welcome”

I drop a leave a response when I especially enjoy a post on a
website or if I have something to add to the conversation.
Usually it’s triggered by the sincerness displayed in the post I read. And after this post Sorry Amazon, You Are Not Welcome | ShyamanujaOne. I was excited enough to drop a commenta response 😛 I actually do have a few questions for you if you tend not to mind. Is it just me or does it look as if like some of these comments look like written by brain dead people? 😛 And, if you are posting on additional places, I’d like to
follow you. Would you list the complete urls of your communal
sites like your linkedin profile, Facebook page or twitter
feed?